High Dollar Exchanging Rate Snuffing Out Importation and Air Cargo Business
The high exchange rate of the naira to other currencies has grounded air cargo business in Nigeria as checks by newsmen revealed that clearing agents and aviation handling companies last experienced peak in their business at the Murtala Muhammed International Airport, Lagos, which is the hub of air cargo services in Nigeria, in December last year.
It was learnt that the sub-sector has lost projected N5 billion in business capacity, turnover and profits since March this year as the high exchange rate has hampered importation of goods into the country.
President, Association of Foreign Airlines Representatives in Nigeria (AFRAN), Kingsley Nwokoma who is also a top official of cargo airline, Cargolux, told newsmen on Wednesday that the situation has become very bad as most businessmen have been discouraged from bringing goods into Nigeria.
According to Nwokoma, importers do not have access to the US dollars due to the Central Bank of Nigeria new policy on foreign exchange. Again, exchange rate of Naira to dollar is high, which means that goods imported are sold at higher prices at a time the purchasing power of average Nigerian is very low. He said even when the goods are imported, sales turnover is very low.
“The situation is very, very bad now because most important importers are no more importing, so they are no more bringing in cargo. Most of the airlines that are into cargo import are threatening to stop operating into Nigeria because it is not possible for a 100-ton aircraft to be bringing 10-ton cargo. No matter the quantity of the cargo the airline must pay the same charges to the Federal Airports Authority of Nigeria (FAAN) and the Nigerian Airspace Management Agency (NAMA) and it will also pay for fuel. So it is not profitable bringing cargo into the country now,” Nwokoma said.
He expressed the hope that the situation may normalise after the appointment of ministers who are expected to drive the policies in the various sectors. Nwokoma also observed that because Nigeria is import oriented country, things would continue to be difficult if Naira continues with the free fall against the dollar because it would be difficult to import goods, especially now that importers are struggling to procure dollars at the prevalent high exchange rates.
It was also learnt that major handling companies, the Skyway Aviation Handling Company Limited (SAHCOL) and the Nigerian Aviation Handling Company Plc (nahco aviance) have lost about 35 per cent of their market due to the lull in cargo business and are planning to downsize in order to cut cost. Industry observers are of the view that if the situation continues till January 2016, many companies in the aviation sector would sack their workers and the few businessmen who are still importing goods by air may resort to be importing by sea, which is cheaper though it takes longer time before the goods arrive the country.
However, an official of one of the major handling companies told newsmen that business was really down but it has started picking up, “This month is better than last month. It is picking up very slowly,” he said.